Mercury Insurance must pay $27.5 million in fines, Calif. appeals court rules
A state appeals court reinstated $27.5 million in state penalties against Mercury Insurance Co. on Tuesday for charging illegal broker fees in more than 180,000 transactions with auto insurance customers from 1999 to 2004.
The fines, imposed by the state Department of Insurance in 2015, were overturned in 2016 by a judge in Orange County, who said the fees had been legally assessed for insurance brokers’ services to customers, such as comparison shopping. But the Fourth District Court of Appeal in Santa Ana said the purported brokers were actually insurance agents, working for Mercury, who provided no customer services and had no authority to charge fees.
Otherwise, insurance agents posing as brokers “could charge unapproved and unfairly discriminatory fees for alleged separate services that would increase consumers’ cost of insurance,” said Justice David Thompson in the 3-0 ruling. “This is contrary to the voters’ intent as expressed in Proposition 103,” the 1988 initiative that required state approval of rates for auto insurance and other property and casualty coverage.
The fees ranged from $50 to $150 per customer. The total of the penalties is one of the largest the Insurance Department has ever levied against an auto or home insurer.
Read more: https://www.sfchronicle.com/business/article/Mercury-Insurance-must-pay-27-5-million-in-13827326.php?psid=7xfjh
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